Expressing opposition to H.R. 3424 and to any other tax proposal that would limit the use of reinsurance by non-U.S.-based insurance companies.
The bill argues that the proposed legislation would impose burdensome taxes on reinsurance sourced from foreign affiliates, which is a common practice for many U.S. insurers. According to a study cited in the resolution, such taxation could significantly deplete the reinsurance capacity available in the U.S. market, leading to estimated cost increases for consumers ranging from $10 to $12 billion annually. This potential shortfall could increase premiums across various insurance sectors, ultimately affecting policyholders directly.
House Resolution 243 expresses opposition to H.R. 3424, a federal proposal concerning the taxation of reinsurance transactions involving non-U.S.-based insurance companies. The resolution highlights the importance of affiliated reinsurance for the insurance industry, particularly in managing and spreading risk. It emphasizes that purchases of reinsurance from affiliates are essential for large insurers to maintain sufficient insurance capacity, specifically in high-demand areas such as crop and aircraft insurance.
Notably, the bill contains strong language condemning H.R. 3424 for discriminating against the use of offshore affiliated reinsurance, claiming it undermines essential risk management practices inherent in the international reinsurance market. This polarizing aspect of the proposed federal legislation has drawn opposition not only from the Texas House but also from a coalition of industry and consumer advocacy groups who fear the negative economic implications of such tax changes.